The short-seller behind Harry Markopolos: Still under wraps

August 24, 2019 | Hedge Funds

Harry Markopolos will get a share of the short-selling profits from GE’s decline. Question is: who’s punching the trades?

Harry Markopolos unveiled his research report on the alleged accounting shenanigans at General Electric.

Of course, Markopolos made no bones about the fact that he was in league with a hedge fund shorting GE shares. They were pulling for a sharp decline in GE stock at a time the firm continues its turnaround.

Wall Street is still puzzled about the identity of that hedge fund.

Harry Markopolos gives little away

Not much is forthcoming either from the forensic accountant.

“I promised confidentiality,” he said to CNBC.

He did let drop however that it’s a mid-sized hedge fund located on the East Coast and that it did not normally enter the short side of trades.

Why the name is important

There is intense speculation about why Markopolos’ partner is staying in the shadows.

Whatever that reason may be, the disclosure of their true identity may have a significant impact on GE’s stock price.

A big-name hedge fund could well add fuel to the decline in GE’s stock price. On the other hand, if it’s an obscure player, bulls might pick up the courage to scoop up the stock at these low levels and give the shorts a run for their money.

Culp may have the last laugh

If the stock price does not give credence to Markopolos’ allegations of a $38 billion accounting scam at GE, CEO Larry Culp may be vindicated. He had rubbished the report, saying it was “market manipulation, pure and simple.”

When GE shares crashed, Culp put his money where his mouth is. He bought nearly $2 million worth of GE stock, effectively doubling his holding.

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